CareCloud Inc. Q1 2023 Earnings Call

We are projecting rapid organic growth.

Third and fourth quarters.

As for profit <unk>.

<unk> of our costs are fixed or typical adjusted EBITDA cadence closely mirrors the revenue seasonality.

Provide another level of granularity in the first quarter, we processed a similar number of claims is in fourth quarter 2022.

But recognize lower revenue due to the deductibles.

With the same fixed cost structure as revenue goes down GAAP net income and adjusted EBITDA decrease as was the case this quarter.

Turning to the balance sheet, we ended the quarter with $8 million in cash.

I would like to reassure everyone that our credit relationship with Silicon Valley Bank, which is now a division of first citizens.

It's down and they are honoring our agreement to the fullest.

We ended the quarter with $10 million drawn on our $25 million line of credit and.

And SBB has assured us that the terms of our credit agreement are unchanged.

I'll close my comments by reiterating our 2023 guidance.

Do you expect revenue of $142 million to $146 million.

Adjusted EBITDA of $24 million to $27 million.

As a reminder, we believe that 42% to 44% of total revenue will come in the first half of 2023.

And 56% to 58% will flow through the back half of the year.

As we benefit from additional revenue with the same overhead structure.

We expect the adjusted EBITDA distribution will more likely look like 30% in the first half and 70% in the back half of the year as our newer offerings ramp up over the course of 2023.

In terms of Med Srs quarterly cadence over the course of the year, we are seeing great traction with projects, which will result in a strong second half of 2023.

So we're all going to need to be patient in the second quarter.

First quarter results put us on good footing for the year ahead.

We're happy with our progress on the organic growth front and look forward to updating you later in the year.

With that I'll turn the call over to Mahmud for his closing remarks.

Thank you Bill.

We are pleased with our strong start of 2023 and.

And we are proud of the work that.

Team has done.

On the right path for a successful year.

As always I would like to thank our customers shareholders and all of our employees for their continued support.

Cloud mission.

So open the call for questions.

Great.

Thank you Sir.

Ladies and gentlemen, we will now begin the question and answer session.

If you would like to ask a question. Please press star followed by the number one on your telephone keypad.

If your question has been answered and you would like to withdraw from the queue. Please press star followed by the number two.

And if you are using a speaker phone please lift your handset before pressing any keys.

One moment. Please for your first question.

Your first question will come from Jeffrey Cohen at Ladenburg.

Ladenburg Thalmann. Please go ahead.

Hey, good morning, everyone. How are you.

Good morning, Jeff.

Very well thank you all of you.

Great.

Nice to see everyone at Hims I wanted to kind of.

You're a little further hard each talk about some of the.

AI and <unk>.

Past present and future functionality.

And if you could more specifically kind of lead that into.

Some of the GPT.

<unk> conversation somebody.

Talk about some of the inputs there as far as variable inputs and then perhaps talk about some of the <unk>.

Data mining and the Onboarding as well please thank you.

Sure, Jeff that's a great question.

The most probably the hot topic in the industry today, not only for from the healthcare perspective, it's on the order industry perspective, So as I mentioned, we are in the process of currently exploring in our R&D team is working on all of these the possible.

Ways to leverage the AI with the help of this open AI or API that have become available now, but let me just share with you is an existing one as an example, they probably should help you understand the kind of things.

Things that we are trying to work on.

We are in the process of to begin with in the first phase will be utilizing the <unk>. The most recent version which is probably the Virgin for <unk>.

Phebe can trying to introduce a concept of a concept of such as the co pilot concept order a medical assistant concept.

We already have as part of who we are talking HR.

The medical assistant or other areas.

It's in engine. So we are just trying to make that further smart. So what can happen is anonymous D. Not sharing any PHA begin to take the medical history social history. The current medication all of those can pass it on to the AI engine. The AI engine can England generate the basic complete full.

Suggested care plan for that patient and that will be suggested to the doctor. A game is at the end of the needs. The doctor's responsibility to finalize to sign off on the care plan of the care plan. The doctor can wants to use.

But I think they should just help you kind of understand that thats the level that it could be 50 different variables that could have been passed to these open Apis. The results can be received we can parse it compile it and can suggest the information to the doctor can help in identification of rare diseases all Chris.

Making all of this information.

In the case of a rare disease of our system can suggest lebron leveraging the same AI that this patient could have been infected by this one rare disease Doctor. So please conduct these five additional tests as an example, so these are some of the example of this is all we're trying to leverage we are we will communicate.

With the help of the press releases.

The mood any commentary on the M&A environment, how things have moved.

Moved in any particular direction or trends over the past say four or five months.

Yeah. Good good question, Jeff Yeah, we continue to see companies that are on the surface look like potentially interesting acquisition targets.

We also continue to see people have expectations.

Our investment for our shareholders.

We're continuing to see that.

We do think that as the next 12 months unfolds. Eventually the economy is going to get into a recession. Eventually companies are going to start to recognize that they are that theyre getting in trouble and they were gonna be.

Tempting targets. So we're always looking for those.

Okay got it perfect. Thanks for taking my questions I appreciate it.

Thank you Jeff.

Your next question comes from Allen Klee Maxim Group LLC. Please go ahead.

Yes, good morning questions on.

The.

You broke out the pieces of the decline in revenues one of them was.

More volume related to Covid related cases.

Uh huh.

<unk> 22.

Do you have a sense of how much extra.

You think thats factored into like the rest of <unk>.

<unk> 22, and have you factored that into your full year guidance.

Thanks Alan.

So we did.

The delayed and then finally got approved and therefore generate a day.

Of revenue so there's a there's a little more of that in the second.

It was much less than we saw in.

We see some opportunities not though it's not as big as the Covid testing was initially for enrollment in those.

Public health emergency is ending most of that is going away and it's still the number is not in there, but that's going to help us offset some of that in all of this has already been baked in outflows for the rest of the year.

That's great. Thank you you mentioned that you have a.

New force client that will be generating revenue in the second half can you provide any color on that.

Sure. So this is one of the one of the deal we signed.

Towards the end of last year and when it comes to a typical small force deals. Those practices are those deals can go live within 30 days or 60 days, but menu are dealing with large publicly traded national company.

We have to provide a couple of hundred employees. We have to go to as an example, sharing those dates will be and agreeing on the swap fees.

The extensive training on the both sides the security data security Checklist Verifications. So we are we have.

<unk> been going through all of those everything is pointing smooth everything is on track.

But the go lives instead of 30 to 60 days could span between two to three quarters. As an example, so the top of the largest one we anticipate towards some sometime towards the close of the second quarter going live and then we will have the revenue in the third into fourth quarter or the second to the largest one.

She is also a significant one has long language, which I mentioned as part of my my call earlier.

In this recent months and we already have started to receive a very good feedback from the clients. So you will see some of that revenue in the second quarter already.

Okay.

And that's great actually this is the first of the way we're looking at it. This is a work for us.

That's great. Thank you my last question is on.

Converting bookings from wellness to revenues.

You're using a third party and my understanding is too.

Sure.

Make this happen.

Can you explain a little to the degree of what.

Well.

If that were to what theyre doing to ensure adherence and collectability and that theyre doing it or not.

Doctors office.

No what some other companies.

Created a challenge for those two issues.

Thank you so much.

Sure Great question.

We were a technology enabler tech enabled RCM EHR practice management and the technology company. That's worked over strengths has been for such a long time, the chronic care and remote patient. We stepped in there was one thing we do not want to be when start by doing of ourselves as an example, the trained care managers.

So some of those as a partnership with that company with the back India, helping US bridge some of those gaps, but because we are the we are the one who are capable of we have the most capability on the revenue cycle on the technology platforms software. So most of that work is also collaborate.

We are conducting but then when it comes to the can manage a part they have been and will remain there have been participation from this other from other third parties, but we are looking at it or forever and the declines for them. It's us it's our responsibility to work bid.

With that third party to deliver the right results.

I mentioned, just because the three pieces in more one is us. The second thing is declined and the third piece is the patients adaptability and Thats why its taken a little more time to ramp up its.

Absolutely anticipate the same from day, one when we stepped into this.

But this being the first go lives I think by the end of this year, we will have a much better model.

Forecast when when and how the revenue will be recognized but having so far we are making great progress as you mentioned over 90% is already in the production of preproduction stage, either we are conducting the eligibility checks of year, we are engaging the patients to take their consent, while we already have started to.

To talk to the patients with the help of the care managers, taking an approval and review by the physician by the Doctor and have started providing.

The preventative care and then can start submitting the claims.

Okay.

Thank you very much.

Thank you.

Your next question comes from Neil Chatterji at B Riley financial Please go ahead.

Good morning, Thanks for taking our questions.

Thanks for the color on the kind of second half versus first half.

Ards is kind of quarterly cadence on the topline.

'twenty three I guess, a couple of things there how should we think about the potential dollar impact on the two clients rolling off the second quarter and then.

For how should we think about third quarter versus fourth quarter, maybe for the care club for us in the wellness conversions.

Okay.

In terms of the quarterly cadence.

Clients that rolled off last year.

By the end of second quarter. So for example, if you look.

In 2022.

Sure.

Third quarter revenue was about $3 $5 million less in the second quarter.

And that was.

That was almost entirely due to that.

That's fine.

When you when you do the comparison Q1 of 'twenty three to Q2.

Q1 of 'twenty two.

Youre looking at a quarter without the clients versus with you see a negative you're going to have the exact same phenomenon.

In Q2.

It's not like they were doing $12 billion of business, one day and zero. The next day gradually when group after another move moved off but the bulk of the business without it.

Second half of the year. So when we're doing that comparison in third and fourth quarter, you won't have that that phenomenon.

Using using available.

Work in in April .

And the other one is going to be go on live by the end of the quarter. So youll start to see real revenue in Q3, and even more revenue than that in Q4.

Emily with wellness, you have a little bit of revenue right now but of all the business that we signed up last year.

And in the past and then I guess, just actually one more factor that does it needs to.

If you go back a couple of years, we really werent signing a lot of new clients on a on a typical quarterly basis.

The amount of revenue from a new client.

Every quarter Youre getting the impact of the clients, who signed up one or two quarters before and it's and it is growing so youre going to see a very different shape to the to the revenue curve.

Big Force deals they are here.

We are in the cost of goods sold and in <unk>.

Touched on it a little bit there on the Cogs, but yes.

Surprisingly sales.

We've ever shown before because youre going to be seeing this rapid growth in net revenue don't don't.

Back to see improvement in Q3, but I would look at.

Especially expanding more at all in 'twenty three.

Can you just remind us again on the typical productivity ramp there.

And today that number is close to 67, 68, and I'm talking about the overall sales and marketing team offshore and onshore together. So yes, we continue to increase.

Thank you.

Particularly as you ramp it up and then kind of and maybe even touch on the potential.

Okay that.

Ladies and gentlemen, once again, if you would like to ask a question. Please press star one now.

So let me just.

For the therapy practices, though this market has been dominated by some of these large players who had been in this industry for such a long time, where there is range for you but is there a number of others. So today the way. It works is they can the clients over in this space may have been using one of these other industry Ehr's and some cases in the winter.

Faces other cases of employees connected those EHR systems, and multi wherever it needs to but all the rest of the day.

The RCM work is being done and all the other pieces by our team members to over platform. So now for US if you think about it as being the third largest specialty it make more sense for us to first of all penetrating two of our own existing client base, because that's where the easy opportunity exist, but that does not mean.

We do not launch it externally and we do launch it externally at the same time and we do get some of those deals.

Thanks Donald.

The easy sale or the opportunity that exists within our company is far better than or is in the low hanging fruit I would say instead of going to the external one if I think since this is something new we just started we still need to spend probably another few quarters before we can go full force externally with the large campaigns.

Talking about wellness as an example, 2022 hour train refocused most of the focus was in turn.

Total client base.

This year, we have gone on.

You can say, a 50% to 50%, we anticipate 50% of the bookings should come thrombolytic internal client base and the other 50% should come and I'm talking about wellness offering as an example, the <unk>.

The 50%, we anticipate could come from the new logos. So this could even become the anchor this could even become.

The one of the services, we are offering, but we will try to assign the full end to end deal, including RCM. We already have started to see some results and we did sign few clients in the first quarter, the new logos from the product development offering to you from your point, we already have started to see that our network.

Campaigns are in progress and we are we are making progress there.

Great. Thanks for the color I appreciate it.

Thank you thanks Constantine.

There are no other questions. So I will turn the conference back to Kim Blanche for any closing remarks.

On behalf of the company I'd like to thank everyone, who joined US on today's call. We appreciate your participation and your interest in asset the company and we look forward to speaking with you again next quarter.

You all and have a great day.

Thank you.

Ladies and gentlemen, this does conclude your conference call for this morning.

Again, thank you all for participating and we ask that you. Please disconnect your lines.

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